Interruptions in Foreclosure Processes Impede the Clearance of Shadow Inventory

The growth of shadow inventory on a national level continues to increase, but has slowed with the “recent disruptions to foreclosure time lines”. Of the hardest hits states during the housing market crisis, Nevada and Arizona have had the least trouble clearing out their shadow inventory. The National Association of Realtors (NAR) believes that, “This is largely due to their shadow inventory moving somewhat faster through the pipelines and comprising larger share of existing sales”.

Indeed, the national level of distressed home sales increased 39% in February. While the short term effects of the increase in distressed home sales negatively impacts the median sales price on a state by state basis, the NAR anticipates that certain states will clear their shadow inventory anywhere between 7 to 34 months.  Wyoming is anticipated to clear their 1,837 shadow inventory homes within 13 months.

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